Firm trade prevails; IT, TECK leads

Indian equity benchmarks added gains to continue their firm trade in the late afternoon session on account of buying in frontline blue chip counters. Investors however took cautious approach after Indian services activity expanded at its weakest rate in three months in August as firms’ order books filled up at a slower pace, which led to HSBC Services Purchasing Managers’ Index (PMI), compiled by Markit, falling to 50.6 in August from 52.2 in July. Traders were seen piling up positions in IT, TECK and Capital Goods while selling was witnessed in FMCG sector stocks. In scrip specific development, Tata Motors was trading firm despite disappointing August sales data after brokerages upgraded the stock and raised its target price. Brokerages were bullish on the stock on account of product launches by Jaguar Land Rover (JLR) and recovery in commercial vehicle business.

On the global front, the Asian markets were trading mostly in green, while the European markets traded on optimistic note. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 8,100 and 27,200 levels respectively. The market breadth on BSE was positive in the ratio of 1503:1369 while 111 scrips remained unchanged.

The BSE Sensex is currently trading at 27202.96, up by 183.57 points or 0.68% after trading in a range of 27067.02 and 27217.53. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.87%, while Small cap index up by 0.63%.

The gaining sectoral indices on the BSE were IT up by 2.64%, TECK up by 2.44%, Capital Goods up by 0.97%, Metal up by 0.58%, Auto up by 0.57% while, FMCG down by 0.35% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.52%, Infosys up by 3.39%, Wipro up by 3.28%, TCS up by 2.67% and Tata Motors up by 1.47%. On the flip side, GAIL India down by 2.14%, ITC down by 1.27%, Hero MotoCorp down by 1.11%, BHEL down by 1.08% and Bajaj Auto down by 1.00% were the top losers.

Meanwhile, concerned over the rising cases of willful defaulters, Finance Ministry has asked the Reserve Bank of India (RBI) to tighten lending norms to prevent borrowers from opening multiple current accounts outside their consortium banks. Currently, there has been a spate of defaults taking place in banking system and majority of them are on account of economic recession but there is small proportion of cases where defaults are intentional.

Ministry is of the view that defaulting borrowers are indulged in diversion of funds by opening of multiple current accounts outside the members of the consortium. Finance Ministry has suggested the central bank to tighten the norms and monitoring system so that such activities could be prevented. Ministry had also ordered limited forensic audit of some non-performing accounts of public sector banks to find out whether there were any irregularities in sanction of loans.

Banking is the most dominant segment of the country’s financial sector and plays an imperative role in the economic development of the country. Increasing NPAs have become a major concern for industry adversely impacting the profit margin of banks. Gross NPAs of public sector banks increased to Rs 2,27,264 crore at the end of March 2014. Five key sectors include infrastructure, textiles, iron and steel, mining and aviation services contributed significantly to the level of stressed advances.

The CNX Nifty is currently trading at 8133.65, up by 50.60 points or 0.63% after trading in a range of 8092.25 and 8139.30. There were 30 stocks advancing against 20 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 3.64%, Infosys up by 3.52%, Wipro up by 3.23%, TCS up by 2.84% and NMDC up by 2.38%.

On the flip side, GAIL India down by 2.16%, BHEL down by 1.29%, ITC down by 1.17%, Bajaj Auto down by 1.10% and DLF down by 1.06% were the top losers.

The Asian markets were trading mostly in green; Straits Times increased 15.28 points or 0.46% to 3,343.58, Jakarta Composite increased 17.87 points or 0.34% to 5,219.46, Shanghai Composite increased 22.58 points or 1% to 2,288.63, Taiwan Weighted increased 50.63 points or 0.54% to 9,450.35, Nikkei 225 increased 59.75 points or 0.38% to 15,728.35 and Hang Seng increased 568.93 points or 2.3% to 25,317.95.

On the flip side, FTSE Bursa Malaysia KLCI decreased 4.92 points or 0.26% to 1,862.77 and KOSPI Index decreased 0.38 points or 0.02% to 2,051.20.

The European markets were too trading in green; France’s CAC increased 56.86 points or 1.3% to 4,435.19, Germany’s DAX increased 119.14 points or 1.25% to 9,626.16 and UK’s FTSE 100 increased 61 points or 0.89% to 6,890.17.